Downing Renewables & Infrastructure Trust (DORE) has announced that its board has agreed terms for a recommended all-cash acquisition by Polar Nimrod Topco Limited (Bidco), a newly formed vehicle wholly owned by Bagnall Energy Limited. The transaction, which will be implemented via a Court-sanctioned scheme of arrangement, values DORE at approximately £174.6m, or 102.6016p per share.

Bidco already holds 25.4% of DORE’s share capital and has secured support from a further 22.5% of the voting shares through a combination of irrevocable undertakings and letters of intent, bringing total backing to nearly 48% of eligible votes [QD comment: this very much looks like a done deal already. While, Bagnall’s shares aren’t eligible to vote in favour of the scheme at the court meeting, they are eligible at the general meeting and, regardless, its 25.4% shareholding would allow it to block a competing bid. A further 22.5% of shareholders are also putting their weight behind the Bagnall bid]. The offer price represents:

• A 23.62% premium to the closing share price of 83.0p on 19 June 2025
• A 21.6% premium to the 1-month VWAP and a 25.9% premium to the 12-month VWAP
• A 7.5% discount to the ex-dividend NAV of 110.87p (adjusted for the Q1 dividend of 1.4875p)
• An 8.7% discount to the unaudited NAV of 112.36p as at 31 March 2025

Assuiming the offer proceeds, shareholders will retain the right to the first quarter dividend, due to be paid on 27 June, and may also receive a special dividend of 0.5p per share if the scheme completes after 31 August 2025. Both will be payable in addition to the offer price.

Rationale and background

DORE has delivered strong NAV performance since IPO in December 2020, generating a 36.2% total NAV return to 31 March 2025 – equivalent to a 7.1% annualised return, in line with its 6.5–7.5% target. However, like much of the UK-listed alternative investment trust universe, DORE’s share price has lagged significantly behind NAV in recent years. As a result, the shares have traded at a persistent and widening discount since late 2022, despite share buybacks and strong portfolio performance.

Bagnall, which is also advised by DORE’s investment manager Downing LLP, cited the challenges faced by DORE in achieving scale and liquidity in public markets. It noted that the trust’s smaller size, lower trading volumes, and limited ability to raise fresh capital make it structurally disadvantaged – contributing to the enduring discount and investor apathy.

Bagnall’s Chair, James Watson, commented: “For too long, DORE’s true value has not been reflected in its share price, and today’s offer represents an attractive opportunity for shareholders to immediately crystallise value.”

He added that Bagnall sees long-term value in renewable infrastructure and believes DORE will achieve better outcomes as a private vehicle, free from the constraints and inefficiencies of public listing.

The DORE board, led by Chair Hugh Little, unanimously supports the offer, stating that while they continue to have confidence in the investment strategy and manager, the deal offers certainty and fair value in light of persistent headwinds.

“Despite consistently delivering on our investment strategy, the prolonged dislocation between share price and NAV – driven by macroeconomic uncertainty and sector-wide derating – has limited the Company’s ability to grow and affected investor returns,” Little said.

Shareholder support and next steps

Bidco has received irrevocable undertakings from DORE directors and several institutional shareholders, including T. Choithram & Sons, Human Capability Foundation, and Downing Sustainable Investments, and letters of intent from Hawksmoor, FS Wealth Management, and Tyndall Investment Management.

Together, these represent approximately 16.76% of DORE’s issued share capital and 22.54% of the shares eligible to vote on the scheme. A formal vote is expected later this year, with the scheme documentation to be circulated within 28 days. Subject to shareholder and court approval, the deal is expected to complete in the third quarter or early fourth quarter 2025.

If approved, DORE would be de-listed, and its assets brought under the umbrella of Bagnall, which has managed renewable infrastructure investments since 2013. The portfolio includes solar, wind, hydro and battery storage projects across the UK and Northern Europe.

A valuation report from Forvis Mazars LLP, confirming the 31 March 2025 NAV, accompanies the announcement and will be included in the Scheme Document.

[QD comment, Matthew Read: This deal follows a now-familiar playbook: a subscale, well-managed renewables trust with strong NAV performance finds itself persistently undervalued by public markets and is ultimately taken private by a long term investor that can see the potential. While the 23.6% premium to the share price will likely prove attractive to many shareholders, especially amid the ongoing derating of the listed renewables space, the discount to NAV may well be disappointing for longer-term shareholders when asset sales in the renewables space have frequently been conducted at NAV or a small premium, and DORE’s assets are both scarce and desirable and would likely warrant a premium in our view.

DORE has, by most objective measures, performed well. It has delivered solid total returns, maintained dividend growth, and remained operationally sound. But market conditions – including rising interest rates, a lack of scale, and limited liquidity – have severely constrained its ability to close the discount or grow meaningfully. The £12m share buyback programme launched in 2023 was well-intentioned but ultimately insufficient to change sentiment.

With institutional investor support in hand and no counter-bid likely, the deal appears poised to go through but we are sorry to see it go. It marks yet another chapter in the ongoing consolidation and privatisation of UK-listed alternatives – and should prompt further re-evaluations across the renewables sector.]